Stocks Tanked on FED Rate Cut, Will Crypto Markets Climb?

Stocks Tanked on FED Rate Cut, Will Crypto Markets Climb?

The US central bank slashed interest rates for the fourth time in less than a year but stock markets reacted badly. Will crypto markets be a hedge against falling economies?

FED Rate Cut Unwelcome

Another Federal Reserve interest rate cut has been on the cards for some time. That necessity was escalated as Coronavirus (Covid-19) infections increased across the US.

Crypto markets have continued consolidating following their upshift earlier this week but stock markets have taken a hit as investors remain on edge. Total market capitalization remains just above $250 billion as bitcoin holds on to support at around $8,800.

The 50 basis point cut has dropped the US interest rate to just below 1.25%, down from about 1.75%. Not all are convinced that this was the right thing to do.

According to economists that spoke to MarketWatch it signals to investors that “policymakers are grasping significant uncertainty and rapidly mounting downside risks.” Goldbug and crypto critic Peter Schiff told the outlet;

“The problem isn’t the pin, the problem is the bubble and once the bubble is pricked, the damage is done and the air is coming out of this bubble,”

AFP reported that Asian equities fluctuated in early trading today following yesterday’s sell-off on Wall Street.

The Crypto Hedge

According to one industry executive, this could be good news for crypto markets, especially if investors start looking for a hedge against failing fiat and stumbling stocks.

Coinbase CEO Brian Armstrong tweeted that such measures could lead to crypto growth this year.

A down stock market and interest rate cuts may lead to growth in crypto this year. Governments around the world are likely to look to stimulate the economy in any way they can, including using quantitative easing and expanding the money supply (printing money).